Proposal aims to simplify college financial aid application

Gail MarksJarvisTribune staff reporter

If you have just finished applying for financial aid for a college student, you might have a few gray hairs.

Filling out a FAFSA--the form required for obtaining low-interest federal loans and college grants and scholarships--is a grueling process. It's so confusing and time-consuming that parents often start to think of their tax return as a walk in the park by comparison.

Keep your eye on Congress if you are among them. A bill sponsored by Rep. George Miller (D-Calif.) and Rep. Rahm Emanuel (D-Ill.) is intended to make it easier to apply for financial aid. The "College Aid Made EZ Act" would simplify the Free Application for Student Aid form.

Yet the form is more complicated than many of the ones businesses must complete when they want government grants or loans, he said.

Emanuel contrasts the FAFSA, with about 100 questions, to the simpler form used by the Export-Import Bank.

"Multibillion-dollar corporations fill out 13-question forms to receive millions of dollars in Export-Import Bank loans," Emanuel said. "Shouldn't it be just as easy for high school seniors and their families to pay for college?"

Of course, businesses have hired guns to advocate for their positions. And they roll out estimates of dire consequences for companies and the economy if businesses are overburdened with paperwork. Case in point: the constant cry that Sarbanes-Oxley Act requirements cause businesses to struggle, or to go private.

The complaints on behalf of students have been more quiet as parents curse FAFSA forms in the privacy of their own homes. Yet the Institute for College Access & Success, a non-profit student advocacy group, contends that the FAFSA deters families from seeking aid.

For example, families see questions asking for bank balances and conclude, erroneously, that they won't receive aid, according to the institute. Then, without that aid, students either skip college--figuring it's too expensive--or juggle too many jobs and drop out.

The American Council on Education estimates that 1.5 million students didn't apply for Pell grants--free money for low-income students--in 2004, even though they would have qualified for the aid.

The FAFSA must be filled out to obtain both student grants and loans, such as Stafford Loans.

"The costs of aid complexity falls heavily on low-income, non-white and non-English-speaking youth, whose lagging educational levels are repeatedly cited as a justification for financial aid," Harvard economists Susan Dynarski and Judith Scott-Clayton said in a recent report.

To make aid more accessible, the bill sponsored by Miller and Emanuel would create a simple financial aid form for people making less than $20,000 a year.

But the pressures of the FAFSA weighs heavily on middle-income families too. With college costs up about 41 percent since 2001, about two-thirds of students receive some form of financial aid--either grants, low-interest loans or both. Students leaving college average almost $20,000 in debt.

Although financial aid can make college more manageable, Miller said people have complained that they were too perplexed by FAFSA questions to finish the application.

To address that, the bill would set up a system in which families would be relieved of about two-thirds of the questions they must now answer on their income and assets. Instead, parents would simply give permission to the Department of Education to access personal IRS tax records, and transfer financial data automatically into appropriate slots in the FAFSA.

The system would be much like the mortgage-application process, said the Institute for College Access & Success. Instead of applicants filling in tax information, the IRS would simply route the required data to mortgage institutions. A similar process is used by the federal Small Business Administration.

The institute contends that the simple process would eliminate mistakes on FAFSAs, and allow college financial aid offices more time to evaluate the needs of students rather than checking calculations on applicants' paperwork.

According to the federal Advisory Committee on Student Financial Assistance, colleges spend about $432 million a year verifying that data in financial aid forms is correct.

Gail MarksJarvis is a Your Money columnist and the author of the book, "Saving for Retirement Without Living Like a Pauper or Winning the Lottery." Contact her at gmarksjarvis@tribune.com.